How to Use Data Analytics in Banking to Provide Personalized Banking Experiences

Emphasize Long-Term Financial Wellness

The most effective retail banking strategies focus on the long-term financial wellness of consumers. Financial wellness can be measured by a combination of factors, including overall satisfaction with the current financial situation, positive financial behaviors and attitudes, and an ongoing plan to help reach future financial goals. 

With access to a wealth of data analytics in banking, banks and credit unions are in a unique position to help smooth out potentially choppy transitions through financial life stages. Here are a few ways your financial institution can support account holders’ financial wellness with data analytics in banking:

• Develop stress-reducing products. Create financial products that alleviate financial pressures, making day-to-day money management easier.
• Distribute educational resources. Increase financial literacy by providing account holders with educational materials that help them make informed financial decisions.
• Offer strategic investment options. Help account holders plan for the long term with investment opportunities tailored to their financial goals.

Leverage Fintech Innovations

The rise of fintech lenders shows that today’s consumers value ease and efficiency, qualities that they often find in the tech-driven solutions offered by fintechs and neobanks. These companies provide faster loan approvals and processes than traditional banks and credit unions, appealing to a tech-savvy clientele.

Retail banking strategies need to adapt to fintechs and neobanks. Instead of simply classifying them as competitors, leverage their market research and product development for your own growth potential. Expand your loan portfolio to offer like-products and develop go-to-market materials that focus on borrowing needs required at each stage of life.

Here’s how you can take advantage of this trend using data analytics in banking:

• Understand borrowing behaviors. These fintechs have identified a target audience with a common trait: consumers looking for a simple loan application process. Leverage the transaction data and the relationships with account holders you already have to identify those who have elected to borrow from fintechs. These consumers have demonstrated they are willing to pay the application and loan fees for the convenience of accessing these funds. 
• Tailor loan products. Use the account holder data you have to identify current life stages precipitating the need for a loan. Assess the appropriate loan terms, and structure a loan offering and go-to-market strategy that accelerates your product’s growth goals.

Revitalize Rewards Programs

While some might consider credit card rewards programs outdated, they remain a significant draw for many account holders, particularly when these programs are personalized. Cardholders want to feel like they are being rewarded for the choices they make. But they want the rewards to be personalized to their unique activities, interests, and spending behaviors, which evolve as they transition between life stages. Make the data you have from your account holders’ credit and debit transactions actionable to deliver personalized banking services to your account holders.  

Use the insights about your account holders’ preferred merchants to develop your credit card rewards program, incorporating your account holders’ preferred activities and interests. Here are some specific examples of how to tailor programs to meet demand:

• Home improvement incentive. Identify account holders who are home improvers and offer a 5% cashback reward for home improvement purchases.
• Travel enhancements. Identify account holders using your card for airline purchases but not hotel stays. Offer rewards for hotel purchases to spur additional utilization of your card.
• Educational contributions. Identify account holders with young children and offer a credit card that automatically deposits 2% cash back rewards from all your purchases into a 529 plan.

At every stage of life, your account holders will appreciate a unique set of credit card rewards. Get creative and have fun identifying rewards that will incentivize your account holders to increase card utilization. Be sure to discuss with your financial institution’s compliance department before creating a rewards program. 

Strategic Questions for Aligning Financial Services with Life Stages

By integrating these data-driven strategies, FIs can not only meet but exceed the expectations of their account holders at every financial milestone. To align account holder needs with their financial life stage, ask these questions:

• What are the pivotal life events that impact my account holders? How do we position our offerings to help them manage those events?
• How can we simplify our account holders’ financial product experiences with the services we offer?
• What products and services can we provide to help our account holders attain their financial goals at each stage of life?
• How can we help prepare our account holders for upcoming life events?

Using data analytics in banking can help answer these questions and drive the institution’s product strategy. Alkami’s Customer Insights, extensive analytical toolkit, and expert team of advanced-degreed library scientists accomplish this mission with speed and accuracy. Our analytics platform cleanses and categorizes billions of inconsistently labeled transactions to produce actionable and usable insights.